For Elon Musk's Tesla, India Entry Faces Bumps on the Road Ahead
By : Krishna Mishra
After years of speculation and negotiation, Tesla has officially entered the Indian market by launching its first showroom in Mumbai, with plans to expand to Delhi. Bookings for the Model Y are now open on Tesla’s website, marking a symbolic and long-awaited move. However, the road ahead remains uncertain for Elon Musk's company.
India recently became the world’s third-largest auto market, surpassing Japan, offering immense volume potential. Yet, the luxury electric vehicle (EV) segment—where Tesla operates—still makes up only about 4% of total auto sales in the country. In such a price-sensitive market, Tesla's high-end vehicles may remain niche unless structural changes, such as tariff reductions, occur.
Tesla’s current strategy reflects caution. Rather than committing to local manufacturing immediately, the company is importing vehicles to test market response and better understand India’s infrastructure and regulatory landscape before making large-scale investments.
A major hurdle is India’s steep import duties, which can reach up to 100% for fully built cars. While a potential India–US trade agreement might lower tariffs on American EVs, the outcome remains unclear. Geopolitics also play a role. Elon Musk’s strained relationship with former US President Donald Trump, combined with Trump’s skepticism toward EVs, could dampen the chances of aggressive lobbying for Tesla's interests in India.
With no guaranteed policy relief in sight, Tesla faces a strategic choice: either delay deeper engagement until conditions improve or start building locally under India’s new EV policy to gain tax advantages and market share.